Mining companies post record production results

The World Today - Tuesday, 23 October , 2007 12:48:00

Reporter: Brigid Glanville

ELEANOR HALL: For years, economists have been warning that Australia's mining boom would soon come to an end. Today, some of Australia's largest mining companies are proving it's still far from over.

BHP Billiton, Oxiana, and Newcrest mining companies have all posted record quarterly production reports. But analysts say while the mining boom will continue, a skills shortage could dampen any long-term growth prospects, as Brigid Glanville reports.

BRIGID GLANVILLE: The insatiable demand from China for Australian minerals continues to grow, and the miners continue to deliver. BHP Billiton, Newcrest, and Oxiana have all recorded record quarterly production reports.

Oxiana, which mines gold, copper and zinc in Laos and Western Australia produced 55,000 tonnes of the base metals from June to September, and mined 41,000 ounces of gold.

Owen Hegarty is the managing director of Oxiana:

OWEN HEGARTY: As far as Oxiana performance is concerned, we've got great assets, we've got great people. We're all we're in stable domains around the planet, got a wonderful growth profile, a sensational exploration team and we expect to continue to show and the strong growth that we've had over the past several years.

BRIGID GLANVILLE: BHP Billiton has also produced record quarterly production reports for iron ore, from its West Australia operations, underpinned by strong demand from China. Analysts say the reports are in line with market expectations and prove the resources boom is far from over.

Mark Niutta is from ASANDAS investment house:

MARK NIUTTA: I don't think it's over by any stretch of the imagination. There's a long way to go. As long as China keep consuming and we're seeing iron ore prices look as if they're going to go quite a bit higher, probably 20 to 25 per cent next time round.

BRIGID GLANVILLE: Mark Niutta also says investors are expecting the big mining giants to continue to deliver record results.

MARK NIUTTA: People are getting used to having to two and three per cent gains every day of the week and thinking this is going to last forever and it's that easy and unless they come out with a 10 or 15 per cent increase on their margins and their profits and cost drop by that much, what you know, we want be elsewhere. Things aren't as good as they were, they're not as rosy as they were.

People forget that, you know, the market does tend to have peak and troughs. And at the moment, short-term, I think the resource sector is run very hard. And I wouldn't be surprised to see a little bit of a pullback or a bit of a breather.

But long-term, I still think the reports were good. China still looks like it's consuming everything that it can get. So, I don't see any major dramas.

BRIGID GLANVILLE: But analysts such as Mark Niutta warn the rising Australian dollar and skills shortage could dampen any prospects of a long-term mining boom.

MARK NIUTTA: I think for us, the main thing that's going to slow it down is the Aussie dollar, and it's getting hard to get good people. So, if you can't get the geologists and the drivers and the trucks and the engineers, then you can't get the stuff out of the ground. It's quite a simple situation, but that is what I think will stop Australia being a bigger exporter.